Lindian scores US$50m boost for Malawi rare earths giant

Christmas has come early for Lindian Resources – it will wrap up the year with a US$50 million (A$78.6 million) funding agreement and take-off package for its Malawi rare earths project with the United States-based commodity trader, Gerald Metals Group. 

Gerald’s funding injection will start stage one development of the Kangankunde rare earths project, with US$40m (A$62.8m) earmarked for capital expenditure and the remainder covering the costs of creating initial run-of-mine stockpiles.

The funding package includes a mix of equity, convertible instruments and prepayment-type loan facilities.

Gerald Group is one of the world’s biggest independent and employee-owned metal trading powerhouses. 

The company was founded in the US in 1962, has since set up shop in London and operates a series of metal trading hubs across the globe exchanging everything from aluminum and copper to iron ore, precious metals, tin and cobalt, as well as related concentrates and raw materials. 

Its end-to-end service model covers the entire commodity value chain, including sourcing, marketing, logistics and storage, hedging and risk managemen, and structured finance solutions.

In return for its investment, Gerald will have first dibs on monzonite concentrate from stage one at Kangankunde and will be at the front of the line for production from stage two.

Lindian Resources’ chief executive officer Alwyn Vorster said: “We are pleased a globally recognised metals trading group, Gerald Metals, is working with Lindian towards accelerating the development of the world-class Kangankunde rare earths project. The proposed funding facility and offtake agreement for monazite concentrate will be key enablers to advance Kangankunde’s construction activities in the first half of 2025.”

Management says stage one is poised to be a “logical springboard” for future expansion at Kangankunde, which is fully permitted for construction.

The project has an initial ore reserve of 23.7 million tonnes with an impressive average grade of 2.9 per cent total rare earth oxides (TREO), underpinning a mine life of 45 years. 

It is slated to generate about 15,300 tonnes per year of clean, high-grade concentrate running at about 55 per cent TREO to produce about 8400t of rare earth oxides and 1640t of the valuable magnet rare earths, neodymium and praseodymium.

According to a recent feasibility study released in July of this year, the project has a net present value of US$555m (A$872m) at an 8 per cent discount rate.

It is also forecast to generate an average annual EBITDA of US$84m (A$132m) after a capital cost of just US$40m (AU$62.9m), presenting a payback period of less than two years, running at an average ultra-low operating cost of US$2.92 per kilogram TREO.

Despite volatile commodity prices, rare earths remain critical ingredients in various applications, with future demand expected to remain strong, driven by the clean energy economy through e-mobility and wind power technology uptakes. 

According to the International Energy Agency, demand for rare earths is expected to nearly triple by 2050 under the 2050 net zero emissions scenario.

China recently imposed restrictions on the export of rare earths, including neodymium and praseodymium. These new regulations took effect in early October and are part of China’s broader strategy to control the supply of critical minerals. 

With startup funding all but squared away with a global metal trading powerhouse and approvals in place, Lindian is nudging closer to joining the ranks of rare earths producers at a time when Western governments are pushing to secure reliable and independent sources of the critical metals. Lindian’s timing seems serendipitous.

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